Thematic investing is all about capitalising on future trends and an excellent way to achieve an extra level of diversification in a portfolio. Although identifying themes is not easy, and there is no guarantee for success, a good starting point is to review the smörgåsbord of themes around the world and consider which will either continue, accelerate, end or begin.
All investments should have a measurable objective and a quantifiable risk profile. Theme Investing is no different – some by nature are speculative, others specifically aggressive and yet others for income. In addition to normal considerations the following questions should be asked before committing funds to themes.
- Does the risk profile of the Theme suit me?
- What percentage of my portfolio will be allocated to Themes?
- How much time is available to wait for results?
Thematic investing is primarily a top-down approach but the bottom-up analysis, and more importantly ongoing monitoring, needs be done to ensure that value is obtained and the best security is included.
We currently have two themes available